Mortgage rate trends: Rates hit highest level in almost 23 years

Mortgage rates this week

• The average rate on a 30-year fixed mortgage is up to 7.31% this week
• The average rate on a 15-year fixed mortgage is up to 6.72% this week

30-year fixed-rate mortgages

The average 30-year fixed mortgage rate increased to 7.31% this week, up from last week’s average of 7.19%. A year ago at this time, the 30-year rate averaged 6.70%.

15-year fixed-rate mortgages

The average 15-year mortgage rate is up this week to 6.72%, compared to last week's average of 6.54%. This time a year ago, the 15-year fixed rate averaged 5.96%.

What are mortgage rates today?

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Mortgage rate trends

See how mortgage rates have changed over the last 3 months. The average 30-year mortgage rate hit a high of 7.31% the week of September 28th, while the average 15-year mortgage rate topped out at 6.72%, the same week.

What’s behind current mortgage rate trends?

Inflation: The current inflation rate is 3.7%, compared to 3.2% last month. Mortgage lenders often demand higher interest rates to compensate for the eroding purchasing power of money due to inflation.

Federal funds rate: The federal funds rate is set by central bank officials, and it’s the interest rate that banks charge one another for borrowing money. Central banks adjust key interest rates to control inflation or stimulate the economy, and mortgage rates can follow suit. The current federal funds rate is at 5.25% to 5.50%.

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How mortgage rates affect your monthly payments

Say you’re buying a $500,000 property, have a 10% down payment and lock in a 30-year fixed mortgage at today’s average rate of 7.31%. Using a mortgage calculator, your monthly mortgage payment would be $4,410 a month, not including property taxes and insurance.

When buying a home, keep in mind that most lenders want you to keep your housing expenses at or under 30% of your gross income. Based on your income and expenses, use this calculator to find out how much home you could afford at today’s mortgage rates.

Mortgage application demand down

Demand for mortgages decreased 1.3% from last week, according to the Mortgage Bankers Association (MBA).

Meanwhile, refinance application activity went down by 1% — and is 21% lower than the same week a year ago.

"Based on the FOMC’s most recent projections, rates are expected to be higher for longer, which drove the increase in Treasury yields. Overall applications declined, as both prospective homebuyers and homeowners continue to feel the impact of these elevated rates,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist.

"The purchase market, which is still facing limited for-sale inventory and eroded purchasing power, saw applications down over the week and 27 percent behind last year’s pace. Refinance activity was down over 20 percent from last year and accounted for approximately one third of applications. Many homeowners have little incentive to refinance."

Should you buy a home at the current mortgage rates?

With the current 30-year fixed mortgage rate at 7.31%, you might wonder if now is the right time to buy a home. To help you make the best decision, ask yourself a few questions.

Am I financially stable? Reflect on your current financial situation, including your income, job stability, and overall financial health. Use a mortgage income calculator to determine what monthly mortgage payment you could comfortably afford. Remember to factor in property taxes, insurance, and maintenance costs.

Where do I see myself in 5, 10 years? Imagine yourself five, 10, 15 years from now. What does your career look like? Are you in the same city/state? Thinking about your long-term plans can help you determine if buying a home at today’s mortgage rates is a good idea or not.

How’s my credit score? Your credit score plays a significant role in the interest rate you'll be offered. If it’s on the low end, you may want to focus on boosting your score. With a higher credit score, you can qualify for the best mortgage rates available.